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News Release


Release No: 185-96
April 04, 1996


Deputy Secretary of Defense John P. White announced today the Department ofDefense plans to draw upon the competitive forces of the private sector togenerate savings for modernization, improve the performance of its supportoperations, and sustain readiness of U. S. forces. White's comments cameduring a press conference announcing the delivery of three DoD reports toCongress. The reports are:

"Improving the Combat Edge Through Outsourcing"

"Depot Level Maintenance and Repair Workload"

"Policy Regarding Performance of Depot Level Maintenance and Repair"

"The Department is committed to ensuring future modernization, maintainingreadiness and improving the quality of life for its forces. To meet thesepressing requirements, we must find more efficiencies and savings in ourinternal operations through outsourcing," White said.

To meet that goal, the Department and the military services have initiated asystematic review of support activities to determine where outsourcing orprivatization could improve readiness and generate savings. This reviewincludes the areas of depot maintenance, base commercial activities, materielmanagement, finance and accounting, data centers and education and training.

Private sector experience has demonstrated that outsourcing not only savesmoney and improves efficiency, it also enables private corporations to betterfocus on their primary business, while improving service quality andresponsiveness. These lessons are transferable to many government functions.

Competition and outsourcing in DoD are already yielding significant savings.Cost comparisons conducted between 1978 and 1994 show savings of about $1.5billion a year. The military departments and defense agencies that tookadvantage of outsourcing and competition have reduced their annual operatingcosts by about 31 percent.

Addressing depot maintenance policy and repair workload, White said that theDepartment's approach will provide essential wartime capabilities and performall depot maintenance work while reducing costs.

Sizing military depots to provide core, or high risk, mission-essential,capabilities is more effective and efficient than arbitrarily requiring them toperform a minimum of 60 percent of the workload, as now required by law, hesaid.

"Such restrictions prevent DoD from taking full advantage of private sectoropportunities and are counter to good government and managerial principles,"White emphasized.

The three reports describe the Department's outsourcing initiative and explainthe methodology and processes used by the military Services to establish coredepot maintenance requirements. These requirements shape the public depotfacilities, equipment, and personnel that DoD maintains as a ready andcontrolled source of technical expertise.

The workload report concludes that there is no analytical basis for the current60 percent floor at military depots. It recommends adoption of theDepartment's proposed core method to identify the minimum essentialcapabilities that must be retained to support military requirements and soundbusiness practices.

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